Now Two More Serious questions need to be answered in this continuing Satyam Saga !
QUESTION NO 1
DID RAMALINGA RAJU INTIMATE LENDERS TO SELL HIS PLEDGED SHARES BEFORE RELEASING HIS CONFESSION LETTER TO REALISE A BETTER PRICE TO CLEAR MORE OF THE LOAN ?
This is very much posssible as the Promoters Holdings was 8.61 % on December 16,2008 when Satyam announced the controversial Maytas Takeover Proposal but has since dropped to below 4%…It so transpires that promoters had pledged their shares to raise funds…Ramalinga Raju claims in his confession that the understated Liability of Rs 1230 crs in Satyam is on account of his raising funds for the Company against his own Shares !
Lenders have sold these pledged shares post December 16,2008….Question arises as to whether the disgraced Ramalinga Raju pre-warned the Lenders to selloff before he released his confession letter yesterday morning…This would have got the Lenders a better price as Satyam share was murdered yesterday from Rs 175 to close at Rs 40 on release of the Confession Letter
Another Thought !…If Raju claims he arranged Rs 1230 crs for Satyam against his shares then what was the accounting entry passed in the Books of Satyam for this ?…as Monies should have come into Satyam,the Debit obviously would have been “Bank” but where was the Credit given for the Double Entry ?…If it was ,as it should have been,given to the Lenders to reflect their Lender Status in the Books then where is the understatement ?…..Understatement arises only when the Credit was not given to the Lenders but to some other Accounting Head…It cannot have been a Single Entry…Books would not have tallied !….What the hell were the auditors Price Waterhouse doing ? How did these entries escape them in both Substance and Form ! ?
I want to know where the Credit was given in the Satyam Accounts for such funds as Raju claims were arranged by him against his shares !
OUESTION NO 2
NOW WE KNOW WHY THE MAYTAS PROPOSAL WAS STRUCTURED THE WAY IT WAS ! QUESTION IS WHICH ‘BIG FOUR FIRM ‘ CONNIVED WITH SATYAM TO BRING UP THE VALUE OF THE MAYTAS DEAL TO US $ 1.6 BILLION ! TO MATCH THE SATYAM ASSET HOLE ?
IF INDEPENDENT DIRECTORS WERE IN THE DARK,THEN WHEN THIS MAYTAS DEAL WAS PROPOSED AT THE BOARD,THEY SHOULD AND WOULD HAVE IMMEDIATELY QUESTIONED WHY ALL SATYAM CASH WAS BEING USED AND WHY THE DEAL WAS BEING ROUTED THROUGH SONS OF SATYAM PROMOTER RAMALINGA RAJU AND NOT DIRECTLY GIVEN TO MAYTAS !…AT THIS STAGE THESE GREAT ACADEMICS,PROF KRISHNA PALEPU OF HARVARD,PROF RAMMOHAN RAO,(DEAN OF ISB) AND DR MANGALAM SRINIVASAN AND INTEL ICON, MR VINOD DHAM WOULD HAVE REALISED THE DUBIOUS REASONS FOR SUCH A STRUCTURING AND THE CRIMINALITY THAT WOULD STAND EXPOSED…THEY SHOULD HAVE NOTED THEIR DISSENT IN THE MEETING !
THERE WAS NO REAL CASH TO EXCHANGE FOR THE MAYTAS INVESTMENT OR PROPERTIES…THEREFORE IF THE DEAL WAS ROUTED TO MAYTAS DIRECTLY, THEN ONE OF THE MAYTAS COMPANIES, BEING LISTED,WOULD COME IN THE PUBLIC EYE FAST AS IT WOULD HAVE TO SHOW CASH RECEIVED OR RECEIVABLE AND THIS WOULD HAVE EXPOSED THE HOLE IN SATYAM CASH !
NOW ON A S.O.S BASIS, RAMALINGA RAJU NEEDED TO QUICKLY PASS AN ACCOUNTING ENTRY IN SATYAM BOOKS TO SHOW THE TRANSFER OF CASH TO PROPERTIES OR INVESTMENTS IN MAYTAS COMPANIES…THE HOLE WAS RS 7000 CRS…SO WORKING BACKWARDS AND IN CONNIVANCE WITH A ‘BIG FOUR FIRM’ VALUER THE DEAL WAS ANNOUNCED AT AN INFLATED US $ 1.6 BILLION !….AND WOULD YOU BELIEVE IT ! THE LIKES OF MR VENUGOPAL DHOOT OF VIDEOCON SIDED WITH RAMALINGA RAJU IN SAYING THIS WAS A GOOD DEAL !
THE VALUATION OF THE DEAL BY A ‘BIG FOUR FIRM’ WAS FRADULENTLY DONE AS IT WAS CLEARLY GUIDED BY THE AMOUNT OF THE CASH AND DEBTORS HOLE IN THE ASSETS OF SATYAM
WHAT A SHAME FOR INDIAN BUSINESS ETHICS AND CORPORATE GOVERNANCE AND A SLAP ON THE FACE TO ALL EXCHANGES,AUDITORS,SHAREHOLDERS,ANALYSTS,REGULATORS AND BANKERS FOR NOT REALISING THIS SHAM FOR YEARS ON END !
FOR INSTANCE WHAT SHOULD HAVE RUNG WARNING BELLS FOR A POTENTIAL CASH HOLE WAS THAT WHILE SATYAM EARNED RS 1716 CRS IN 2007-8 IT’S DIVIDEND PAYOUT WAS A MEAGRE RS 274 CRS,INCLUDING TAX…THAT”S JUST A MISERLY 16% PAYOUT…IT COULD NOT HAVE DONE MORE BECAUSE IT DID NOT HAVE ANY REAL CASH EVEN THOUGH IT SHOWED RS 3960 CRS CASH AND BANK BALANCES AT MARCH 31,2008 !
THE BOTTOMLINE IS THAT SMALL INVESTORS HAVE BEEN THE VICTIMS…SATYAM’S ANNUAL REPORT OF 2007-8 SHOWS THAT THERE WERE 218530 SHAREHOLDERS OF WHICH 195940 OR 90 % WERE SMALL SHAREHOLDINGS WITH HOLDINGS IN THE 1-500 SHARES CATEGORY
THE DISGRACED CHAIRMAN,RAMALINGA RAJU’S CHAIRMAN’S COMMUNIQUE IN THE ANNUAL REPORT ALSO BEGINS WITH THE STATEMENT
” FISCAL 2008 WAS AN OUTSTANDING YEAR FOR SATYAM.WE ACHIEVED RECORD REVENUES AND RECORD NET INCOME.”
ALL A BLOODY LIE ! AS IS THE ANNUAL REPORT COVER BOAST OF ‘A COMMITTMENT TO VALUE CREATION’…..PRAY TELL ME !,MR RAMALINGA RAJU ….HOW COULD YOU KNOWINGLY BOAST LIKE THIS WHEN YOU CONFESS THAT YOU’VE BEEN COOKING UP THE BOOKS FOR YEARS ! ?…DOES COOKING UP CREATE VALUE ! ?
SHAME ON YOU ! AND SHAME ON US FOR ALLOWING OURSELVES TO BE LED ON BY YOU !
I’ve deliberately given in Bold Capital most of the above to reflect the intensity of killing anger and the real imminent danger facing our Capital Markets which this confession by Raju has unleashed
I’ve had ringside seats for Twenty years in the Fields of Auditing,Accounting,Consulting,Media and Brokerage Houses,having worked with leading names in every field In India and Overseas ….Have lived through and been witness to the unfolding of several Scams and have commented on them through the years in media articles and in my addresses and workshops across India and Overseas
Whether it was the Reliance Duplicate Shares Scam,the Harshad Mehta BR Scam followed by the CR Bhansali and MS Shoes Scam or the Ketan Parekh Scam or even the IPO Modus Operandi to gain unfair allotment advantage using Benami Demats accounts….I’ve gone into depth in all to figure how they did what they did and what drove them to do so…..I’ve revealed cases of Insider Trading in my adresses and training workshops and seen them being conveniently buried quietly by authorities
So it angers me no end to see heads and experts (I’m fighting the temptation to name them !) offering their take on this Satyam Saga……they themselves have either been involved or indulged in Serious and Significant Malpractises in the Capital Markets and Corporate World or were instrumental in burying cases so the accused got away !
We need a Serious Cleansing of Our System…but with the deep rooted nexus and connivance of all ,it is only shareholder activism that will bring about this cleansing,otherwise retail investors will be continued to be seduced to our markets only to be made suckers by those who are are listed,control,regulate,manipulate and run it in various garbs !…because like the ‘Double Entry Requirement’ in Accounting there is a Double Entry in our Markets too…For every Seller there must be a Buyer,read Sucker !
3 thoughts on “NOW TWO MORE SERIOUS QUESTIONS EMERGE IN THIS SORDID SATYAM SAGA UNFOLDING!”
Excellent. Send your article to the editors of the Indian business media.
The reporting that I have seen so far in the business press is beyond the pale.
Example – Last week Business Standard had a letter from Byrraju Foundation Head explaining to us morons that Raju is a saint because he gave money to charity.
So did Bernie Madoff and Ken Lay and possibly Dawood Ibrahim.
No one raised any questions about Raju’s foundation and yet the Indian media seems incapable of doing some basic investigative journalism and instead keep relying on educated idiots like RamMohan Rao, the great Satyam director and Dean of ISB.
What a joke !
Gaurav, I am adding my two bit here.. Is it possible that the books of accounts were correct and Mr. Raju has now siphoned off the cash out of Satyam and gave this story? This sure takes the country into a tail spin and gives him extra time. I am thinking on these lines because:
a) I think this confession letter of his, seems too simpistic.
b) The method of fraud that he has confessed to, defies logic completely. To your point about the accounting entries and the double entry system.
c)This would involve a lot less people to be involved than the earlier way of going on for years showing fictitious assets.
This is just a stray thought but seems to me as far easier to do than what his confession suggests. What do you think?
Check my blog on PWC’s Statement
If they say they have appropriate evidence to support their audit then it points to either Funds being got in at half year and year end to show as Deposits or else a case of forging of Bank Documents or some Banking Staff conniving to provide false certificates of deposit…This would have been accepted by the auditors as sufficient evidence and wool would have been put over their eyes
Let’s see what really happened…ICAI has issued a show cause already to PWC to provide the audit working papers
ROC is conducting Search and Seizure at Satyam Offices in Hyderabad and SEBI has summoned Ramalinga Raju at 4.30 pm today and his lawyer says he will represent
The Serious Fraud Investigation Office (Ministry of Corporate Affairs) Team has already reached Satyam Offices too
As for Raju siphoning cash,he claims he actually pledged his own shares to raise cash for Satyam
What really happened will unfold as the days unfold
I am pretty sure Big Ticket Investors may take the lead to file cases against Satyam and Raju…check out my Larsen Investment in Satyam Blog today